Are you considering shifting to a credit union?
First, it’s essential to understand what a credit union is and what it’s all about. They are financial institutions run by co-owners and have no stakeholders.
The outstanding advantages of joining a credit union are the high interest on savings and low interest on loans.
The present technology has made the research about these unions easier, where most of them have websites.
Here we will help you understand the advantages of trade unions you will enjoy upon joining.
But first,
Types of Credit Unions
Before we get to the advantages of credit unions, let’s check the types of credit unions you are likely to come across in your community.
- Employer Credit Unions: It serves people in a specific profession or company. They include firefighters, postal employees, and teachers. Government employees may not be part of this plan but rather have their credit unions.
- College Credit Unions: Colleges and universities have these unions that target students, faculty, staff, and alumni. The students get affordable services here.
- Military Credit Unions: These credit unions are accessible to military members.
- Group Credit Unions: Mostly serve fraternal groups and churches, limiting their membership to a particular group.
- Local Credit Unions: Provide services to a specific community. The requirement is residing in the region the union is located.
- Federal Credit Unions: To join these national unions, you need to be 18 years and above and a U.S citizen.
Advantages of Credit Unions
1. Lower Fees
It would be best to consider joining a credit union because of the low fee they charge on joining and monthly fees.
Unlike banks, the unions don’t charge for ATMs; their main aim is to help their customers save and not make the stakeholders richer.
The rates on loans are lower compared to that of banks. According to the National Credit Union Administration report in 2021
Additionally, the union’s overdraft fees are lower than the banks’ amounts. The best part is that the fees collected are used in improving loan rates and upgrading services for the clients.
With credit unions, you don’t need a minimum balance in your checking account, making it easier to build up your savings habit, unlike banks that require you to have a minimum balance.
2. Voting Rights
Credit unions offer you a chance in decision-making through voting.
The leader you choose presents all your concerns to the other board members. The board of directors oversees and supervises services offered.
Each member of the union has the right to participate in elections since they are co-owners of the union.
To run for a position on the board, you also need to be a member and in good standing.
The election is conducted during the annual general meeting with some of the unions providing an online voting system that saves both time and cost.
If your credit union has branches in various regions, the delegates vote on behalf of the members.
3. Focuses on the Community
One of the significant advantages of credit unions is the impact on the community they serve.
The union invests the resources in the communities by involving other local organizations to keep their income revolving in the community.
While banks return their profits to the stakeholders, credit union profits go back to the community by giving high dividends on savings.
When there is a business to settle on, the union doesn’t get into it without consulting the members who decide the way forward.
4. Cooperation Between Credit Unions
Maybe the credit union near you has a limited geographical footprint, and you feel it may interfere with your banking services.
However, you don’t need to worry since most credit unions have ATMs spread out in other areas.
And another thing, if you settle on using another financial institution, your credit union covers the reimbursement fee.
Some credit unions have formed a partnership and agree that you can make transactions in any branch of the union.
5. Personalized Service Experience
We already mentioned that once you become a member, you are a co-owner of the credit union, and since it covers a smaller area, we expect better-personalized services.
Experts in the union will guide you on how to go about saving and make the borrowing process more manageable.
Credit unions partnering with local investors will bring some of the services at hand. For example, if you need to purchase a house and your credit union has partnered with a real estate company, you will likely get the best package.
Don’t be afraid to approach your credit union when you have a unique financial need; they care for the welfare of their members.
Credit unions are focused on helping each member reach their financial goal through building their saving habits.
6. Offers a Variety of Services
Despite covering a small area, the credit unions offer various services.
Besides mortgage loans and business loans, they offer additional services: financial education, overdraft protection, car loans, and consumer loans.
You may think that unions are not advanced compared to banks; I suppose you might be wrong.
They have adopted online banking services such as mobile apps where the customers access the services at their comfort.
7. Favors Small Borrowers
Do you have a small business in mind that does not require a large loan to start or a small amount for your loan?
A loan from a credit loan will work perfectly for you, unlike the banks which offer larger loans.
The lower interest rates will make it even easier for you without mentioning that you don’t need collateral for personal loans.
When the union is evaluating you for a loan, they look at your credit score and check your job history. The approval may be favorable compared to that of banks.
Final Word
Thorough research on the credit union near you will help a lot. Remember that different unions have different governing policies. Check the requirements, too, before settling on one.
Terms and conditions may be tiresome to read, right? But these are essential; make sure you read each and understand them before signing your agreement. In addition to that, choose a financial institution that fits your financial needs.